The Beer Game -or- Why Apple Can’t Build iPads in the US • Hacker News Board

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#121

Post by excuse-me » Thu, Apr 05, 2012, 4:52 PM UTC

egsmith wrote: post #93

jonknee wrote: post #49

> Because of the bullwhip effect illustrated by the game, Apple needs to have factories in China because the supply chain is there. We learned in the Beer Game that minute changes have massive ripple effects along the supply chain. > The U.S. has lost that industrial base and it’s extremely difficult to get it back. It’s not about unions, jobs Americans don’t want - it’s about delay. Considering that Foxconn is start…

Brazil factory is MUCH smaller, for example the new iPad factory only has 1.4K employees, and Brazil gives them tax benefits. http://translate.google.com/translate?hl=en&sl=auto&...

That's the lesson Europe and America learned with import duties years ago. You set duty levels to protect your local industry, it keeps out an international product that customers want and you have no local competitor to. So they open a "screwdriver plant" which just screws the "Made in X" label on.

The local government ends up subsidizing this process, under the claim of creating jobs, to far more than the income from the tarif.

Meanwhile your consumers are still paying more for the product, paying again for the tax breaks and you still haven't protected any local iPad competitor ;-)

edit: A famous example of this is a Ford plant in Chicago that removes seats and windows from Ford vans. There is a stiff US import tarrif on foreign trucks to protect the US truck building industry. Ford builds Transit vans (box van in US speak?) in europe but it would be too expensive to import those into the US so it imports mini-buses = box vans with seats. It then has a plant that removes the seats and windows converting them back into Transit vans to sell.

But the important thing is that high quality seat-removal jobs are kept in the US, a plant in Chicago is paid for by the tax-payers of Chicago and a great American truck building company like Ford is protected from cheap foreign competition by Ford.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#122

Post by damoncali » Thu, Apr 05, 2012, 4:54 PM UTC

mindslight wrote: post #109

damoncali wrote: post #94

Earlier quoted context omitted.

You think they don't do this in China? Look around. Making your problems someone else's problems is a time honored business practice.

As a general negotiation technique for assigning of responsibility, sure. But management at both Chinese factories is still small and in touch enough to know that if 1M unneeded custom parts are produced, it's a waste no matter how the financial cost is split. American companies meanwhile are so deep in overabstraction and middle management that the individuals are only capable of covering their asses and claim to ha…

I don't think it's a false piece of mind. Managers at Dell, for example, know all about the bullwhip effect. They also know that when buying commodity parts, you can generally source from more than one supplier. If you squeeze one too hard and they die, you just get another one because they're lining up to serve you.

You can't "solve" the bullwhip effect - you can lessen it. You can use IT, training, etc. And you can force (through market power) the consequences of it on your suppliers. Doing so doesn't mean that you're blind to the pitfalls of the practice.

None of this has anything to do with being American or Chinese.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#123

Post by [deleted] » Thu, Apr 05, 2012, 4:57 PM UTC

podperson wrote: post #28

ctdonath wrote: post #20

Earlier quoted context omitted.

Did you read the article? The whole point is that you can't just "reopen the plants" because those plants rely on other suppliers in a complex fast-moving supply chain; in China those suppliers are practically next door and have turnaround times measured in hours, while in CA the suppliers are miles, states, or even continents away with turnaround times measured in weeks . One hiccup in supply (say, something's wrong…

And even if it weren't, Fender isn't producing new classes of mass market products with unknown demand.

[deleted]

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#124

Post by richieb » Thu, Apr 05, 2012, 4:59 PM UTC

jgervin wrote: post #74

Cost is the main driver here. I am lefty, but I agree the unions are a little out of control. I am sorry, but a guy who stands in a production line building cars should not be making $125k per year (source was a series on TV, think 60 minutes where they talked to some of those workers). I am glad unions are there to help make sure people are not overworked and have benefits, but come on guys. You shot yourself in the…

Why not? That kind of job is boring and repetitive. You would not do it, would you?

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

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Post by jerf » Thu, Apr 05, 2012, 5:00 PM UTC

e40 wrote: post #98

acslater00 wrote: post #54

Earlier quoted context omitted.

That's a myth. The US has a huge and growing manufacturing base. We make airplane engines, medical devices, computer chips; all kinds of complex, high-tech manufacturing. We have the highest manufacturing productivity per worker in the world. What we don't make anymore are the kinds of products that require rote assembly tasks, like shoes and clothes and iPads. The upshot is that we have decreasing manufacturing empl…

You realize I didn't mean we manufacture nothing, but that we manufacture much, much less than we used to, right? If we can't agree that manufacturing started to move out of the US decades ago, was accelerated by NAFTA, and that we are a consumer of goods made elsewhere (more than others are a consumer of goods made here), then this conversation isn't going to go well.

The only way to stem the tide of downvotes here is going to be to stop repeating yourself in other comments and directly address acslater00's graph.

There's nuances here to be explored in what exactly is being manufactured, and there's some other interesting ways to extract bad tidbits of news out of that data, but it is certainly the case that the data does not justify running around shouting "DOOM! DOOM!" about manufacturing qua manufacturing in the US.

Personally I'm upbeat about the future. As robots and automation continue marching forward, the US goes from having a major labor cost disadvantage relative to poor countries to having a significant educational advantage. (Not a unique advantage, Europe and Japan also have good stories here, but China is not as well off on this time frame per capita.) I don't expect the broad direction of that curve to change anytime soon.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#126

Post by Retric » Thu, Apr 05, 2012, 5:05 PM UTC

kevinalexbrown wrote: post #79

From a practical perspective, it seems to me that the Beer Game rests in three parts: in imperfect information, time delays, and most importantly, independence of agents. If each member of the supply chain knew consumer demand perfectly far enough in the future, they could compensate. Likewise, if each member of the supply chain could instantly scale their process, they could compensate. The key, though, is that even…

That's one piece. The other huge issue is that a Chinese worker can produce an iPad for less than a robot while an American worker costs more. A lean supply chain looks great on the books, but it's also a huge bet that nothing bad happens. However, add flexible enough automation like say having 500,000 humans and you are far less dependent on any one customer so you can ramp up and down vary quickly. Which both reduces the need for a large supply chain and cuts the response time to changing market conditions.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

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Post by Symmetry » Thu, Apr 05, 2012, 5:08 PM UTC

ChrisLTD wrote: post #46

bencpeters wrote: post #26

Earlier quoted context omitted.

I think this is a matter of "our" perspective being different. I also don't have hard stats, but I'd be willing to bet that the average HN reader is much better educated, with many more valuable job skills, and much more entrepreneurial than the average American as a whole. Our economy has been transitioning from a goods/manufacturing-based one to a service-based economy for years. The question in my mind is whether…

I don't have numbers to back this up, but I think in general it would be a good thing for America as a whole, and for the American middle class in particular, if we began to move back toward being a country of "makers" rather than a country of "service providers." From the data I've seen from a few Google searches, U.S. industrial manufacturing output keeps going up (with hiccups in recessions), but employment in man…

Actually, the people who make the McDonalds burgers do count as manufacturers, since the burgers are made offsite and only warmed up at the restaurant. But it is stupid that doing the same thing in different places could change something from a service to an manufacturing job.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

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Post by farnsworth » Thu, Apr 05, 2012, 5:09 PM UTC

kevinalexbrown wrote: post #79

From a practical perspective, it seems to me that the Beer Game rests in three parts: in imperfect information, time delays, and most importantly, independence of agents. If each member of the supply chain knew consumer demand perfectly far enough in the future, they could compensate. Likewise, if each member of the supply chain could instantly scale their process, they could compensate. The key, though, is that even…

Couldn't the factory have hired temporary/seasonal workers?I know that only helps for these cases where you know something about the demand ahead of time though.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

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Post by pault » Thu, Apr 05, 2012, 5:11 PM UTC

siglesias wrote: post #116

jonknee wrote: post #76

Earlier quoted context omitted.

> I don't know any of the details, but I would assume Foxconn is performing the absolute minimum level of assembly necessary to meet "domestic manufacturing" requirements. So it is in no way an effective counterexample. It's absolutely a counterexample. The iPad is assembled in China, but its parts are from all over the world. Now it's also assembled in Brazil. The supply chain in China isn't critical to the iPad's a…

I think that all that is going on with Brazil is that it's a miniature replica of the Foxconn plants in China, and as been mentioned numerous times, it's only because it would be MORE expensive to make them in China (however inexpensive) and ship to them to Brazil than to deal with an inflexible supply chain in Brazil and make them there. Even factoring in demand and supply volatility. If things don't go well for the…

Correct. The retail price of imported consumer electronics in brazil is literally double that of the U.S.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#130

Post by OzzyB » Thu, Apr 05, 2012, 5:14 PM UTC

yummyfajitas wrote: post #57

tosseraccount wrote: post #52

Earlier quoted context omitted.

Therefore ... you'd happily give up your job to someone who needed more? Just to prove a point.

I probably wouldn't be happy about it, but yes - if someone can do my job cheaper or better then I should be replaced.

I that before or after you gave him the know-how and IP to do so?